A Roller Coaster Year Ends With U.S. Markets Mostly Down

Investors may be disappointed with the lackluster performance of the United States stock market in 2015, but, given all that happened, it could have been worse.

It was a year when corporate earnings underwhelmed, Greece nearly crashed out of the euro, China carried out a shock devaluation of its currency, the price of oil slumped and the Federal Reserve increased interest rates for the first time in nearly a decade.

After its close on Thursday, the Standard & Poor’s 500-stock index finished the year down 0.73 percent. The performance was well below the solid gains of the last three years.

But the index was still up 63 percent over the last five years. What is more, the stock market was able to bounce back from a summer rout that dragged the S.&P. 500 more than 10 percent below the nominal high it reached in May. After reinvesting dividends, the benchmark was up 2.35 percent in 2015.

“I don’t remember a year where there were so many roller coasters along the way,” said David Rosenberg, chief economist and strategist at Gluskin Sheff. “The whole year was like a giant theme park.”

In short, after many months of low volatility in the markets, the convulsions of 2015 were a jarring reminder that investing in stocks can be a risky business. And while plenty of analysts on Wall Street have relatively optimistic forecasts for 2016, many of the forces that upset markets in 2015 — like uncertainties about currencies and commodities and the potentially chilling effect of higher interest rates — could continue to buffet markets.

The S.&P. 500 on Thursday fell 19.42 points, or 0.94 percent, to close at 2,043.94. The Dow Jones industrial average fell 178.84 points, or 1.02 percent, leaving it down 2.2 percent for the year, its first annual decline since 2008. The technology-heavy Nasdaq index did better than the other two benchmarks in 2015, rising 5.73 percent for the year.

And technology firms were among the top performers in 2015.

Shares in Netflix, which continues to add subscribers at a fast pace, were the biggest gainer in the S.&.P 500 index in 2015, soaring 133 percent. Amazon’s stock was the second-best performer, more than doubling in 2015 as the company surprised investors with stronger profits. In contrast, Walmart, its bricks-and-mortar rival, dropped 29 percent.

Lower oil and gas prices hurt the prospects of energy companies. This caused the energy companies within the S.&P. 500 to lose nearly one-fourth of their value in 2015.

The pain in the oil and gas sector also caused stress in the junk bond market, where energy companies have borrowed huge amounts in recent years. The prices of junk bonds fell over 10 percent in 2015, according to Bank of America Merrill Lynch’s United States high-yield master index.

The selling in the more speculative reaches of the credit markets is a sign that several years of speculation, brought about by ultralow interest rates, may now be unwinding. Some analysts expect the shakeout to intensify.

“High-yield credit is going to get a lot worse,” said Atul Lele, chief investment officer at Deltec International, an investment firm. He also thinks emerging markets, where stock markets fell steeply in 2015, will continue to suffer in 2016, as companies in developing countries struggle to repay dollars that they borrowed in recent years. “The problem is that they are going to be defaulting on U.S. dollar debt and they don’t have the dollar liquidity,” Mr. Lele said.

The crucial question is whether the United States economy can continue growing at around its current rate as the Fed raises interest rates. Away from the stock market, there were indications that investors are not confident about the outlook for the economy.

The yield on the 10-year Treasury note might have been expected to rise considerably in 2015 as the economy grew and unemployment fell. Yet the note closed on Thursday with a yield of 2.27 percent, barely higher than the 2.17 percent at the end of 2014.

Likewise, the price of oil, as measured by the benchmark United States crude contract in New York, fell by nearly a third in 2015. Some analysts saw the plunge as a portent of weak global growth, since it might indicate that companies are buying less oil to fuel their operations.

Yet despite such indicators, many analysts said they saw activity within the United States economy that could keep it growing at a moderate pace. For instance, they said, United States consumers, benefiting from potentially higher wages and lower energy costs, could gain further confidence in 2016. While higher wages might dent profit margins for firms, higher spending by consumers could also bolster sales for certain companies. “Next year is going to be the year of the wage breakout,” said Mr. Rosenberg, the strategist. “That’s going to be a pervasive theme.”

Worries about global growth, which have weighed on stock markets in recent years, could recede if European economies grow faster in 2016. After all, the monthslong Greek debt crisis, and the political tensions caused by an influx of refugees from the Middle East, did not prevent European stocks from climbing 7 percent in 2015, as measured by the Stoxx Europe 600 Index. “The developed market economic expansion is very much on track,” Mr. Lele said.

Gloomier stock market watchers, however, said that problems they perceived in the global economy would most likely deepen in 2016, undermining the United States’ recovery and the country’s stock market. In their view, the monetary stimulus of the world’s central banks has been of limited effectiveness.

As a result, countries are choosing to let their currencies fall as a way of stoking their exports and thus their economies. The starkest example of this occurred in August, when China shocked the world by letting its long-stable currency, the renminbi, devalue slightly.

As others have devalued, the United States dollar has strengthened. This can hurt companies based in the United States in two ways. They might find it harder to export and they might have to sell their goods at lower prices within the United States to compete with foreign firms.

Their profits would suffer as result, and the deflationary forces in the economy might gain strength. To the bearish analysts, the devaluations and the problems they cause are an indication that policy makers are running out of ideas.

“I look around the world and see financial markets believing that the authorities are in control — but they are not,” said Albert Edwards, a strategist at Société Générale in London.

The bulls, of course, scoff at such pessimism. But even they say the days of indiscriminately buying stocks and watching them go up are over for now. Many of the financial moves that companies have recently deployed to increase profits — like stock buybacks and borrowing at ever-lower interest rates — may become harder to carry out.

“The era of throwing a dart against the wall, of the rising tide lifting all boats, is behind us,” Mr. Rosenberg said, “You’ll have to do more homework in the coming year.”